An Olympic Sized Sneeze!

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While Canadians follow all Olympic winter sports with great interest, when there’s a broadcast of a hockey game involving Canada traffic halts and bars fill to bursting. I knew, however, that the iconic call, “He shoots! He scores!” would sound a lot better to the gathered masses than, “He sneezes! He shoots! He misses!”

So, as a proud Canadian, I was particularly pleased with our sponsorship deal with a small Canadian company called Cold FX that makes a ginseng-based cold remedy. Historically, they have promoted the product through NHL sponsorships and by using Canadian hockey icon, Don Cherry as a spokesperson. Coincidentally, we concluded our deal with them by signing the definitive agreement contract in late 2008 during the height of cold and flu –and deep into hockey– season.

Cold FX originally contacted us early in 2006, inquiring about a possible Olympic sponsorship. At the time, Johnson and Johnson still had the worldwide Olympic rights, sold to them by the IOC for a number of categories, including the cold and flu remedy category whereby they promoted their successful Tylenol Brand. It was so hard for us to have to say no to companies that contacted us and legitimately wanted to become sponsors of Vancouver 2010 in a category where we couldn’t grant rights. It happened frequently and the IOC always trumped us with their global deals. In fact, the broad coverage of the Johnson and Johnson deal killed a lot of categories for us. As the IOC had granted them worldwide rights in every country, including Canada, up until the end of 2008 it meant that we could not even enter into discussions with any companies that wanted to promote an Olympic association in the following popular sponsorship categories: cold and flu, oral health, wound care (bandaids), skin and hair care, women’s health, nutritional supplements, over-the-counter ,medicines and a whole lot more

So when Cold FX called us in 2006 we politely thanked them and explained that we couldn’t do business with them because we were bound by agreements that the IOC had entered into with their competitor. At the time the IOC was confident that Johnson and Johnson would renew its multi-Olympic Games deal beyond 2008 and into 2010 and 2012. Thank goodness Rick Ramsbottom, one of my sales managers, had a steel-trap memory and great business acumen and thought to jot down and file the Cold FX person’s name and phone number.

After the Beijing Games ended in 2008, the IOC entered into a flurry of meetings with Johnson and Johnson, in an attempt to finalize a four-year renewal. At first we were optimistic that Johnson and Johnson would come back, but with every weekly update from the IOC that optimism faded. Then, when the big financial meltdown occurred in the fall of 2008, we learned that Johnson and Johnson were not coming back as worldwide sponsors. The loss of another top-tier sponsor would go on to create a Tylenol-sized headache for the marketing people at the IOC as they needed to fill that spot, in the middle of a worldwide recession, with another major partner before our games. VANOC was also counting on a percentage of revenue from that deal so it was bad news for both of us.

At VANOC we immediately called Johnson and Johnson Canada, a subsidiary of the global parent company, to see if a domestic deal for the Olympic rights for Vancouver 2010 could be established. Initially, they seemed interested in a “Canada only” deal but, after a lot of back-and-forth, we were unable to come to terms. Johnson and Johnson wanted the rights to too many categories in Canada and we couldn’t justify such a broad category range for a Tier III, $3 million deal. They wouldn’t move up to a Tier II level, whereby we could possibly have been able to justify the broad range, so our talks stalled.

While we were in discussions with Johnson and Johnson Canada, we felt it was in our best interest to have a back-up plan so Rick dug through his files and called his contact at Cold FX to set up an appointment. In October of 2008, I flew to Toronto to meet with the small company, knowing that our $3 million entry fee would be a stretch for them.

I remember the sales call well. Because the meeting was confirmed at the last minute so I altered a Cuban cycling holiday I had arranged and flew to Toronto on my way to Havana. I remember leaving my cycling helmet in the car with Abdul as I went in to meet with Cold FX in the Toronto office. I went into this one alone and gave them my best “Official Supplier Rights and Benefits” pitch. The meeting was with Cold FX’s VP of Marketing Steve Wallace, a packaged goods veteran, and VP of Sales Fred Pitman. They were quick studies and understood the benefits of an association with the Olympics, what they stood to gain as sponsors, and the amazing opportunity that had just opened up with Johnson and Johnson forgoing the worldwide rights.

I remember how Fred, the grey-haired, inveterate sales guy who obviously knew what moved product, picked up a bottle of their product right after I concluded my pitch and, pointing to the bottle cap, saying to his colleague Steve, “Right here, this is where we put the Olympic rings, on the top of the bottle”. There is an old expression in the car-sales business that once you having them talking about the color of the car, the sale is practically made. In a sponsorship negotiation, once the client is talking about logo placement you’re also well on your way. They seemed pumped but I knew that they had bosses and shareholders who also needed to be sold on the Olympic sponsorship concept.

As I left their office they gave me a huge bag of Cold FX bottles to take back with me. At the Toronto airport, in the Air Canada lounge, I ran into an old friend of mine Chris Hebb who used to live in Vancouver and had moved to Ontario. He happened to have a terrible head cold: his nose was clogged, he was sneezing and wheezing and his eyes were red and watery. After shaking hands and before we’d even caught up on our lives I immediately reached into my bag and pulled out a large bottle of Cold FX, figuring he could use it more than me right then. As we laughed at the coincidence I described my recent meeting with the company and then, still laughing, we caught up on the years since we’d seen one another.

After my holiday, I was surprised and happy to hear a voice message from Steve Wallace saying that Cold FX wanted to become an official supplier. I hadn’t expected a positive response so quickly and while I wanted to call him back with immediate congratulations, I knew I needed to stick-handle the deal through VANOC.

The issue was that a Vancouver 2010 official supplier mark, complete with the Olympic rings, on bottles of Cold FX would serve as a huge endorsement of the product in consumers’ minds. That’s one of the main reasons why companies want to step up as sponsors, because of the implied endorsement and the myriad benefits of the close connection with a respected international sporting event. Research has shown that link does provide lucrative benefits to sponsors. But it’s not possible for just any company to pay the sponsorship fee and then put the rings on their product. Each product and company must go through a rigorous examination to ensure that the product or service is legitimate and safe. Cold FX was about to enter this process and I couldn’t confirm our agreement with them until the product had gone through the process. After a few days, I called Steve at Cold FX back, congratulating him on the company’s decision and explaining that the deal would enter the finalization stage after some examination of the product had been carried out.

As a small company, I knew that this would be a break-through marketing deal that would give Cold FX the legitimacy that its product needed to take it to the next big step in its evolution. On store shelves from coast to coast, bottles of its product could now break through the clutter courtesy of the five Olympic rings it would proudly display. It would be the biggest investment by far that Cold FX had ever put into a sponsorship and it would put them on equal footing with the massive Johnson and Johnson.

As I researched this agreement, I learned that the cold and flu market in Canada is very lucrative. Cold FX had about a 50% market share in Canada;Johnson and Johnson, with its line-up of Tylenol products, was its major competitor. Johnson and Johnson is a global company while Cold FX only markets its product in Canada. The rings on the product would allow Cold FX to steal market share away from Johnson and Johnson.

After hearing that Cold FX wanted in we knew we would have to notify Johnson and Johnson that we would be winding down our discussions with the company. They were still interested in being a sponsor, but only on their terms. Meanwhile, I only had Cold FX’s intentions by phone. We didn’t want to abandon Johnson and Johnson –and a potential deal with it– until we were certain that the Cold FX deal would close with a signed and legally binding contract. Andrea Shaw, VANOC VP of Marketing was the lead in the Johnson and Johnson negotiations so she made them aware that we had another offer for one of its categories.

In sponsorship sales you often have to sell both internally and externally. With a willing company poised to step up, I had to ensure no-one at VANOC or the IOC would object to the rings going onto Cold FX bottles. The efficacy of the product would naturally come into question. When I handed that big bottle of Cold FX to my buddy at the Toronto airport he told me that his wife “swore by it”, but I figured I would need a bit more than that anecdotal endorsement to move this deal forward.

Jack Taunton was the knowledgeable and affable doctor who worked for our organizing committee. I found him easygoing and appreciated that he always looked for win-win situations in all the deals we established. He had dozens of doctors who ultimately reported to him in what was one of the more unique and interesting departments of VANOC. I especially liked Jack because, like me, he was a runner and had completed more than 60 marathons. Skinny as a rake, full of positive energy and always in a good mood, as VANOC’s Chief Medical Officer his purview included everything medical-related that had to do with our 6,000 athletes, including anti-doping, emergency services, health and dental clinics and a dozen other healthcare-related areas. That put runny noses and sore throats right up his alley.

After I briefed Jack on the potential deal and the importance of the revenue to VANOC, it was a relief to discover that he believed in the product. Cold FX had given me reams of clinical trial information and results from tests that they had conducted over the years. Jack carefully read all of the studies, carried out a literature review and made some calls to some of his colleagues who specialized in the field, including the doctors with the Edmonton Oilers, who use the product for the team. A few days later he told me it had his stamp of approval. Next, we had to work on getting the IOC to sign off on Cold FX. Getting permission to place the Olympic rings on a product is no easy feat, particularly in a controversial category like cold remedies. So this process took a few weeks, with the IOC’s head doctor in Switzerland doing his due diligence before finally giving us the green light.

With ours and the IOC’s head doctors’ medical approval, and a credit check we had done on Cold FX showing positive financial results, I was confident that we were close to completing the deal. That’s when I received a call from Jeremy Luke our Manager of the VANOC anti-doping department. I was pleased to report to him that Cold FX had passed the litmus tests of not one but two watchdog doctors, that it contained no banned substances, and that it had Health Canada’s approval. I smugly thought that my ducks were in a row. But picking up on the tone of his voice, I realized there was a lame duck in the line-up.

Jeremy patiently explained that, as an organizing committee, we recommended against athletes taking absolutely any supplements before competing. Cold FX was neither a prescribed drug nor an over-the-counter drug, products that have rigorous testing standards. Like vitamin C pills, it was considered a supplement. As Jeremy continued to explain, supplements are controlled and regulated under a different standard. The checks, balances and inspections that supplement manufactures go through are not as stringent as for other drugs and as a result, through the manufacturing process trace elements of banned substances sometimes find their way into a supplement. That’s why athletes are advised to stay away from supplements completely. This is a completely understandable and reasonable response considering how athletes train for decades for their one moment of glory; to have that moment robbed by something as stupid as a trace element errantly appearing in a supplement would be unacceptable. So when Jerermy asked me “How could we endorse a product while at the same time be telling athletes not to take it?” A logical, well-articulated concern and my thoughtful response to him was “Um, well, um er, ah …”

Where did we go wrong? Dr. Jack Taunton had reviewed the manufacturing process and was satisfied with its quality controls. He’d said that Cold FX set the gold standard for checks and balances, batch testing and quality controls to ensure the product’s integrity. Heath Canada had approved the product. The IOC, that is so precise, exceptionally picky and extremely meticulous in everything it did had given us the go-ahead. I felt that we had done our due diligence. Show me the money!

I arranged a longer meeting with Jeremy where he calmly and logically explained his position. I realized this wasn’t a matter that the two of could resolve on our own. We had conflicting objectives: I didn’t want to lose the deal and the important revenue it represented to our organizing committee while Jeremy didn’t want to compromise his anti-doping program. The athletes didn’t want to be weakened by colds when they were here and I felt we had a legitimate product to offer to them with studies showing the effectiveness of it. Jeremy was sympathetic to the athletes’ health needs but could not endanger their chances to earn and keep a medal. The more we argued our points the clearer it became that we were getting nowhere. I finally told Jeremy that somebody else was going to have to make this decision because it involved a significant amount of money, a controversial issue at the core of our mandate, and would ultimately affect the athletes. I felt we needed a final decision from VANOC President John Furlong.

Sometimes our organizing committee was able to make decisions quickly. After I shared our dilemma with Dave Cobb, he agreed that John would have to weigh in. We immediately convened a meeting with Chief Medical Officer Jack Taunton and his medical staff, xx

Jeremy Luke and his anti-doping staff, a few lawyers and some communications people. We spent half an hour looking at the issues from all sides. I presented the history of the deal and how we got to where we were, Jeremy and Jack weighed in with their areas of expertise and then we all looked to John to decide what to do. He looked Jack in the eye and asked him if the product was beyond reproach and if we were prepared to back it. Jack said yes. He explained that Cold FX’s manufacturing processes are the best in the industry, with no chance of contamination. John made the decision: “Well, if it’s good enough for Health Canada and Jack, if you believe in the product and are satisfied in its efficacy and the standards under which is manufactured, then we should stand behind it as an organization and do the deal.”

Finally, to ensure that we and the athletes were protected, we had an internationally recognized independent lab examine the Cold FX manufacturing process. The lab conducted visits to the Cold FX manufacturing facilities and ran a series of tests to verify the integrity of the plants, its procedures and the final product. The preliminary results were good and months after we signed the deal, I was relieved to see that the final results were also positive.

At the beginning of December, we convened a final meeting with Cold FX to discuss how we would deal with the supplement/athlete issue and to finalize the terms of the agreement. Cold FX brought its founder and most senior executive, Dr Jackie Shan because Dave Cobb, who was VANOC’s signatory for our deals, wanted to meet her. As we had resolved all of our outstanding issues earlier in the day, we thought we would use the opportunity of Dr. Shan being in our offices to sign the term sheet and finalize the agreement.

Dr. Shan is an amazing woman. Hers is a real Canadian success story of coming to Canada as an immigrant from China and building a company from scratch. Shan started university at the age of 15 and then went on to obtain not one but two doctorates, the first in pharmacology at Peking Union Medical College in Beijing, China. Shan’s research interests then took her to the University of Alberta where she eventually completed her second doctorate, this time in physiology. The formula for Cold FX emerged from one of her post-doctoral research projects. Impeccably dressed and looking impossibly young for her age, Dr. Shan was also well-spoken, humble and interesting. With our concerns allayed by all of our research, discussions and various tests, the meeting was relaxed and cordial with a friendly paper-signing at the end.

All of our sponsorship agreements called for a significant payment to be made upon signing. In this case, that payment was for half a million dollars. Companies would usually wire us the money within a few days of singing. Of course, we wouldn’t announce a new sponsorship until we had received the signature payment but this part of the process was never a problem. After the term sheet was signed Dr. Shan left quickly for the airport to catch a flight. A few moments after she had left our boardroom, amid the friendly banter and relaxed chat, one of her colleagues remarked, “Oh Jackie forgot to give you the signature payment cheque; quick, run after her and you can probably get it”.

Now there was no way I was going to charge after the company’s founder, begging for our cheque. I said it would be fine if they mailed it to us. But he insisted I get it because, apparently, Cold FX wanted to make a good impression on us by providing the funds immediately. I, however, would feel like an idiot running after the distinguished company founder, trying to breathlessly grab her before she left the building without “paying up”. That would have been crass and certainly wasn’t our style. I told him that he would have to accompany me and ask for it. We caught her just before she got into the cab and she graciously handed me a cheque for $500,000. I put the cheque on Dave Cobb’s chair, as a reminder that he had gotten another honest day’s work out of me.

A few months later in February of 2009 when the games were one year away, Cold FX generously provided us with 1,200 sample packs of their product to share with staff. With the games just around the corner our staff couldn’t afford any sick days.

Of the 50 sponsorship deals we did at VANOC, the turnaround time on Cold FX was the quickest. Most of our deals took at least a year to complete; some, because of their complexity, took up to two years. We met Cold FX for the first time in October, hammered out the details in November and signed the term sheet in December. Taking less than three months to start and finish a deal? We shot! We scored! And in record time.

 

 

 

 

 

 

 

 

 

 

 

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